G.R. No. L-50568 November 7, 1979
Oceanic Pharmacal Employees Union (FFW) vs. Hon. Amado G. Inciong and Oceanic Pharmacal Inc.

FACTS

Oceanic Pharmacal Employees Union and Oceanic Pharmacal, Inc. had a collective bargaining agreement effective from March 1, 1976, to February 28, 1979. On April 27, 1976, the company president sent a letter to the union president confirming a supplementary agreement. This agreement stipulated that management would continue its practice of extending emergency allowance and, crucially, holiday pay to monthly-salaried employees. The letter concluded with a proviso: “Please be informed too that we shall continue to extend the said benefits unless otherwise directed by other new requirements, rules, laws, decrees, etc. on the subject.”
On October 25, 1976, the company posted a memorandum discontinuing the payment of holiday pay for regular holidays. It justified this discontinuance by invoking the proviso in its April 27 letter, citing Section 2, Rule IV, Book III of the Implementing Rules of the Labor Code and Policy Instruction No. 9, which excluded certain monthly-paid employees from mandatory holiday pay. The union objected, filed a complaint for unfair labor practice and CBA violation, and won before the Labor Arbiter and the NLRC. However, the Minister of Labor, through Deputy Minister Amado G. Inciong, reversed these decisions and dismissed the case.

ISSUE

Whether the company could lawfully discontinue the payment of holiday pay, which it had voluntarily agreed to provide in the supplementary agreement, by invoking the subsequent proviso and citing existing labor rules and policy instructions.

RULING

The Supreme Court reversed the decision of the Minister of Labor and reinstated the rulings of the Labor Arbiter and the NLRC. The Court held the discontinuance was unjustified. First, the labor rules and Policy Instruction No. 9 cited by the company were promulgated in February 1976, prior to the supplementary agreement executed in April 1976. Therefore, when the company agreed to continue the benefit, it did so with full knowledge of these existing issuances. The proviso referring to “other new requirements, rules, laws, decrees, etc.” could not logically apply to rules already in effect at the time of the agreement.
Second, and decisively, Section 11, Rule IV, Book III of the Implementing Rules explicitly provided that nothing in the rules justifies an employer in withdrawing or reducing any benefits provided in existing collective agreements. This protective provision mirrors the principle established under the Minimum Wage Law, which prohibits employers from reducing benefits already being paid. The company’s voluntary grant of holiday pay via the supplementary agreement created a contractual obligation separate from statutory mandates. Its unilateral withdrawal constituted a violation of that collective bargaining agreement, which is defined as an unfair labor practice under the Labor Code. Consequently, the company was ordered to resume payment.